March 15th, 2011

The First Sip: House Bill 660 – An Open Letter to Representative Hamilton

As a life-long resident of Missouri City, TX, I am deeply interested in the growth and vitality of our city as well as Texas as a whole. We can all agree that it is in our state’s best interest to find constructive ways of addressing our budgetary challenges while still fostering a positive environment for small businesses to flourish.

That brings me to the reason for my letter. I am writing you today regarding House Bill 660, relating to the sale of malt liquor, ale, and beer by the holder of a brewpub license, filed by Representative Mike Villarreal of San Antonio. This bill would allow Texas brewpubs the right to make their products available for sale off-premise, a right that out-of-state brewpubs already enjoy within the borders of Texas. It is unfathomable that in this economic climate that our statutes would so greatly restrict local small businesses; the very businesses that will help us out of this recession!

The craft brewing industry in the US is booming, showing double digit growth annually despite the country’s economic trouble. Even in light of the current repressive laws, Texas craft brewers are beginning to garner national attention and acclaim. Just imagine what Texas brewers could accomplish with laws that enable new brewers to more competitively sell their products! One needs only to look at Oregon or Colorado to see the potential in job opportunities and tax revenues. Oregon has permits for “Brewery public houses” that allow brewpubs to sell to distributors and/or self-distribute up to 200,000 barrels per year. Their industry has flourished. Oregon produces over 1 million barrels of beer per year, employees over 5,000 people in breweries, generating an economic impact of an estimated $2.2 billion per year.

In Texas, the wine industry experienced extraordinary growth after the legislature loosened restrictions preventing wineries from selling to consumers on-site. In 2003, the Texas Legislature changed the law to allow wineries to sell to consumers in addition to the previously allowed activity of selling to distributors; much like what HB 660 attempts to do (though from the opposite direction – brewpubs can already sell to consumers but seek the ability to sell to wholesalers and distributors). Since then, the number of wineries in Texas has increased from46 in 2001 to 181 in 2009, jobs have increased from 1,800 to over 9,000, and the economic impact has increased from $132 million per year to $1.35 billion in 2009 as Texas has become the 5th largest wine producing state in the US.

Opponents of these bills say that it would open the doors for the unregulated sale of alcoholic products in dry counties, to minors, and other such “sky-is-falling” nonsense. Let’s address these arguments so their lack of logic can come out. The sale of alcoholic beverages in dry counties or to minors would be impossible because the brewers sell to either distributors or direct to retailers. That means that the wholesaler and/or retailers would have to be complicit in the illegal sale to the public. Why would a wholesaler or retailer purchase a product that they can’t sell to the end user or endanger their ability to sell at all by selling to minors? The answer is that they would not.

HB 660 would help Texas brewpubs, most of which are privately owned, grow and remain competitive in a rapidly growing industry. The benefits don’t stop there, however. This bill would allow Texas wholesale permit and distributor license holders to meet the exploding local demand for craft beer by expanding their product portfolios, enable retailers by allowing them to highlight local products, give Texas consumers greater access to the products they want, and help the state by creating new jobs and increasing the tax base. In fact, an Economic Impact study conducted by the Texas Craft Brewers Guild found that statutory reforms like HB 660 could result in $680 Million of new annual economic activity, 6,800 new jobs created, and an estimated $57 million of tax revenue generated annually. Can we really afford to miss out on these benefits given the current job market, economic climate and budget deficit in Texas?

Our laws must not prevent our own small businesses from having the tools they need to be leaders in this industry– especially to the benefit of out-of-state businesses who are currently able to do what our own breweries cannot.

I trust you will vote Yes for HB 660 when given the opportunity in committee or on the house floor.
Thank you for your time and service to our great state.